Rent prices rise for third consecutive month

A mix of high demand for rented housing and limited prospects for aspiring first-time buyers has meant that landlords have benefitted from the relative boom in the lettings market in recent years, and the latest LSL Property Services buy-to-let index suggests that this trend is set to continue.

According to the figures, the average rent price in England and Wales rose for the third consecutive month in June - now standing at £718 per calendar month (pcm) - and landlords also saw the total annual return on property increase from 5.2 per cent to 5.4 per cent.

David Newnes, director of LSL Property Services, said: "The sheer weight of tenant demand continues to push up rents across the country.

"While capital gains are a welcome short term bonus for landlords, it is strong yields that are drawing in long term investors."

With the highest average rent price on LSL Property Services' records being £720 pcm - this level was seen in October 2011 - it seems that the buy-to-let sector has quickened its pace again after taking a slight hit towards the end of the stamp duty holiday.

But as rental charges have increased, the financial strain placed on tenants has also intensified, and the figures show rent that was late or unpaid June rose from 8.9 per cent in May to 9.2 per cent in June.

"While arrears are still down on their 12 month average, rising rents and difficult economic conditions are squeezing tenants' finances," Mr Newnes added.

While impressive profits can be made in the private rental sector, it seems landlords need to balance rent prices with the ability of tenants to meet their monthly payments.

Indeed, financial considerations are vital for investors if they're going to avoid making a loss, and landlord insurance policies can serve as an effective safety net in the event of any unexpected damage costs arising.